Okay, I will now combine everything I’ve learned and analyze the following questions;
The two scenarios being compared are listed in the following two sections.
The general education formula was developed in order to bring fairness in eduction funding across school districts independent of where they are located (property values, etc…) while also acknowledging that some schools will cost more to operate due to location and characteristics of the district. By only focusing on increasing one element of the formula, there is risk of making funding school districts unbalanced.
There are multiple ways in which legislators can change the general education revenue formula. However, it is typical that legislators will increase difference funding mechanisms by percentages. For example, the legislature can increase the basic education revenue by 4%. In FY22 that would mean the revenue would jump from 6728 to 6997.12.
One advantage of only increasing the basic education revenue component is that that component is linked to a few other components. For example, the declining enrollment component provides additional revenues for districts with decreasing enrollment by providing 28% of the basic education revenue value multiplied by the difference between FY22 and FY21 APUs. The components that are linked to the basic education revenue component are;
On the flip side of all this, the legislature could also choose other elements to adjust, such as increasing the gifted and talented revenue from $13 to $14 per APU.
I want to analyze what happens to total revenues for schools when focusing on one component vs. all components for increases. Therefore the following scenarios will be compared;
This will help us determine if some schools benefit way more by only focusing on one component for increases rather than the entire formula.
The following is a list of all the components and how each one was adjusted by 4%.
Basic education revenue
The basic education revenue category provides a base amount of revenue per adjusted pupil units to each school district.
A 4% would bring the revenue from $6,728 to $6,997.12.
Extended time
This program allows a school district to count a student who participates in extended programming for up to an additional 0.2 students in ADM for the time the student spends in summer school, etc…. The allowance is $5,117 X the district’s extended time adjusted pupil units.
A 4% increase would bring the revenue from $5,117 to $5,321.68.
Gifted and talented
A school district receives $13 per pupil unit for gifted and talented programming. $13 X adjusted pupil units. Must be spent on gifted and talented students.
A 4% increase would bring the revenue from $13 to $13.52.
Small schools
A school district that serves less than 960 pupil units is eligible for small schools revenue equal to $544 X the district’s adjusted pupil units, times the ratio of 960 less the district’s adjusted pupil units to 960.
A 4% increase would bring the revenue from $544 to $565.76.
In addition, a few schools received a dollar amount that wasn’t in the usual $544 x APU ratio due to having multiple schools in the district. A few of the schools in these districts qualified for small schools funding. Each of these were also increased.
Declining enrollment
Revenue equals the greater of zero or 28% of the formula allowance for that year and the difference between adjusted pupil units for the current year and the adjusted pupil units for the previous year.
A 4% increase would bring the revenue from $1,884 to $1,959.36.
Local optional aid
This revenue is meant to help equalize property rich schools districts and property poor school districts by providing extra aid to property poor districts. This is done by calculating the revenue, then the levy with equalizing factors, and then aid is distributed by subtracting the levy from the revenue.
Compensatory
Compensatory is a site-based revenue and at least 50% of the revenue must be distributed to qualifying programs at each site. The revenue must be used to meet the educational needs of pupils whose progress toward meeting state or local content or performance standards is below the level that is appropriate for learners of their age. This revenue must be put into a separate account. Revenue increases as the number of compensatory pupil units goes up, which is driven by the number of free and reduced price meals.
A pupil is counted as compensatory pupil if the pupil is eligible for free or reduced priced meals, which is set by the Federal government at 130% and 185 % of the federal poverty guidelines.
A 4% increase in this funding is linked to the basic education revenue so it would be $5,889 to $6,124.56. However, we were not provided the number of students that qualified for free or reduced lunch at each district but rather just given the total compensatory value for each school district. So in this case, we just increased the total dollar amount by 4%.
English learners
English learner revenue: a school district with at least one student eligible for EL services has a statutorily assigned minimum EL pupil count of 20. In addition, a district received more english learner revenue depending on the concentration of english learner students within the district.
A 4% increase for the basic EL revenue would go from $704 to $732.16.
A 4% increase for EL concentration revenue would go from $250 to $260.
Sparsity
This is a vertical funding mechanism meant to shore up support for school districts that serve small student population for an area not served by other schools. It acknowledges the challenges associated with the lack of economies of scale to providing education.
There are three parts to this revenue;
The two main components that can be changed are the following;
Operating Capital aid
Operating capital revenue must be reserved and used for equipment and facility needs. The computation is, the sum of $79 per pupil unit and the product of $109 per pupil unit and the district’s average building age index. The age index is called the maintenance cost index (MCI) and is calculated as follows;
Operating capital revenue is provided through an equalized aid and levy and is computed as follows;
The following adjustments were made for this scenario;
A 4% increase of $79 is $82.16.
A 4% increase of $109 is $113.36.
A 4% increase for the equalizing factor goes from $23,885 to $24,840.40.
Transportation sparsity
Transportation sparsity revenue provides revenue to school districts that have a relatively low ratio of pupils to the square mile area of the school district.
the primary change here is the increase in the basic education revenue.
A 4% would bring the revenue from $6,728 to $6,997.12.
Equity
Equity revenue is designed to provide additional revenue to districts with lower amounts of referendum revenue. Calculations for this revenue is broken into two regions - the 7-county metro and greater Minnesota. The formula consists of three parts.
Equity aid and levy: A district’s total equity revenue is equalized on referendum market value using an equalizing factor of $510,000.
The primary change in equity funding in this scenario is;
Transition
No changes were made to this revenue.
Pension adjustment
No changes were made to the pension adjustment.
Options adjustment
The change here was in the basic education revenue allotment.
A 4% increase goes from $6728 to $6,997.12.
Due to the basic education revenue component being linked to other components, it’s important to understand what changes.
The following is a list of the components that are impacted by a 4% increase to only the basic education revenue component.
Declining enrollment
Revenue equals the greater of zero or 28% of the formula allowance for that year and the difference between adjusted pupil units for the current year and the adjusted pupil units for the previous year.
A 4% increase would bring the revenue from $1,884 to $1,959.36.
Compensatory
Compensatory is a site-based revenue and at least 50% of the revenue must be distributed to qualifying programs at each site. The revenue must be used to meet the educational needs of pupils whose progress toward meeting state or local content or performance standards is below the level that is appropriate for learners of their age. This revenue must be put into a separate account. Revenue increases as the number of compensatory pupil units goes up, which is driven by the number of free and reduced price meals.
A pupil is counted as compensatory pupil if the pupil is eligible for free or reduced priced meals, which is set by the Federal government at 130% and 185 % of the federal poverty guidelines.
A 4% increase in this funding is linked to the basic education revenue so it would be $5,889 to $6,124.56. However, we were not provided the number of students that qualified for free or reduced lunch at each district but rather just given the total compensatory value for each school district. So in this case, we just increased the total dollar amount by 4%.
Sparsity
This is a vertical funding mechanism meant to shore up support for school districts that serve small student population for an area not served by other schools. It acknowledges the challenges associated with the lack of economies of scale to providing education.
There are three parts to this revenue;
The two main components that can be changed are the following;
Basic education revenue - $530: a 4% increase goes from $6,198.00 to $6,445.92.
Elementary sparsity revenue: the total revenue received by each school district was provided so we just multiplied the total elementary sparsity revenue provided by 4%.
Transportation sparsity
Transportation sparsity revenue provides revenue to school districts that have a relatively low ratio of pupils to the square mile area of the school district.
the primary change here is the increase in the basic education revenue.
A 4% would bring the revenue from $6,728 to $6,997.12.
Options adjustment
The change here was in the basic education revenue allotment.
A 4% increase goes from $6728 to $6,997.12.
In this analysis, we are going to measure the “boost” received by each scenario from their original total revenue from the general education revenue formula, and which component of the formula drives the difference between the two scenarios. We will start with school districts, then look at public vs. charter schools, then RUCA categories, planning regions, and economic development regions.
In this section of the analysis, we are going to explore the boost in revenues observed via aggregating revenues at the categorical (i.e. public vs. charter) and geographical (i.e. planning region). Essentially, which regions and categories receive the highest boost between scenarios, not necessarily the school district.
Let’s first take a look at the total dollar amounts for each scenario. The table below is the total revenue provided by the general education revenue under these three scenarios;
A 4% increase to only the basic education revenue component would be
$276,288,982, or 3.75% increase from the original amount. A 4% increase
to the entire general education formula (all components) would be an
increase of $307,276,630 or 4.17%. This is a difference of nearly $31
million between the two scenarios which is .42% of the original revenue
provided.
Let’s take a look and see if what the changes are based on public vs charter schools, RUCA categories and geography.
The public vs charter school table shows that public schools see the largest boost from the two scenarios. Public schools experience a .43% boost by increasing the entire formula vs. only the basic education revenue component by 4% compared to .28% for charter schools.
The RUCA table shows that our most rural districts receive the largest boost by going from increasing only basic education revenue component to increasing the entire formula with a .54% increase. Entirely urban receives a .36% increase. In addition, the entirely rural school districts experience the lowest boost if only the basic education revenue component is increased by 4%. The planning region table shows that Southwest, Central, Southeast, and Northwest receive rather large boosts going from increasing only the bsic education revenue component by 4% compared to increasing the entire formula by 4%. In fact, Southwest goes from receiving the lowest boost if only the basic education revenue component is increased by 4%. But, if the entire formula is increased by 4%, it receives the 2nd largest boost.
The EDRs shows a similar trend. EDR 8, 6W, 6E and 1 all receive rather large boosts from going from one scenario to the other (over .5%). That boost helps them jump up the rankings. For example, EDR 8 receives the 11th lowest boost if basic education revenue component is incresaed by 4%. However, if the entire framework is increased by 4%, it jumps up to having the highest boost.
Finally, let’s look at this at the county level. We are going to look at the boost school districts within each county receive if the entire general education revenue framework is increased by 4% vs. only increasing the basic education revenue component.
The map below pretty clearly shows that school districts located in southwest Minnesota receive the highest boost if the entire general education revenue framework is increased vs only the basic education component.
In this section we will keep all revenues and scenarios based at the school district level and not sum up revenues according to difference categories and regions. We will then look at relationships between districts that experience the largest changes in the scenarios and their categories and regions - essentially, do the districts that would experience the largest boost (top 25%) have a relationship to RUCA category and geography? We will use a z-test to analyze the proportions of districts in the top 25% based on categorical and geographical characteristics and whether they are statistically significantly different than the proportion that the schools make up in the entire dataset.
First, we will examine how schools districts are impacted by the increase from each scenario as a percentage of their original total funding from the general education formula in FY22.
The table below provides the total original revenue received in FY22 as well as the total revenues from a 4% increase to the entire general education revenue formula and a 4% increase to the basic education revenue component only. In addition, the table provides the percent change from the original FY22 revenue for each of the scenarios, where those changes rank against their peers, as well as the percentage of the original budget lost if increasing the bsrev only vs. increasing the entire formula.
What’s interesting is that if you sort by
Rank of pct lost between scenarios you will see that the
top three school districts would lose 1%
Let’s take a look to see if those schools that experience the largest “boost” from a 4% increase to basic education revenue component only to a 4% increase across the entire formula are related to whether it’s a charter vs. public school, it’s RUCA category, and it geographic location. We will use the top 75% with the highest gains in percent of original revenue terms between the two scenarios. The quantiles for that data are;
0.001299, 0.0032336, 0.0040967, 0.0061354, 0.0105367.
The public vs. charter school table shows that there was only 1 charter school in the top 25%. Obviously, this means that there is a statistically significant difference since charter schools make up 36% of the entire dataset. There were 126 school districts with the largest difference between the two scenarios are public schools.
The RUCA categories also indicate a statistically significant difference between being in the top quartile and it’s proportion of the total dataset. The biggest difference is the number of schools located in a urban/town/rural mix county that are in the top quartile - n = 53, pct = 42% compared to being only 27% of the entire dataset. Enrirely rural and town/rural mix school districts also had a higher percentage of schools in the top quartile compared to their proportion of the total dataset. The other major difference is how few school districts located in entirely urban counties are in the top quartiler compared to it’s proportion of the dataset - 10% vs 41% of the dataset.
The planning regions indicate that Central, Southwest and Southeast make up a significantly larger proportion of the top quartile compared to it’s population; 18% vs. 13%, 29% vs. 15%, and 20% vs. 11%, respectively. The other regions have either similar (Northwest) or significantly lower proportions of the top quartile (Seven County metro).
In addition, the EDR’s show that, in particular, EDRs in Southern MN have a higher proportion of school districts in the top quartile compared to other regions. EDR 8, 9, and 10 all have significantly higher percentages - 15% vs. 6%, 11% vs. 7%, and 21% vs. 11%, respectively.
Lastly, the county map shows that the location of schools that are in the top quartiler are concentrated in the southern part of the state.
##
## 2-sample test for equality of proportions with continuity correction
##
## data: top.boost.group$n out of top.boost.group$total.dataset.n
## X-squared = 87.946, df = 1, p-value < 2.2e-16
## alternative hypothesis: two.sided
## 95 percent confidence interval:
## -0.4340992 -0.3186676
## sample estimates:
## prop 1 prop 2
## 0.005434783 0.381818182##
## 4-sample test for equality of proportions without continuity correction
##
## data: top.boost.ruca$n out of top.boost.ruca$total.dataset.n
## X-squared = 65.753, df = 3, p-value = 3.462e-14
## alternative hypothesis: two.sided
## sample estimates:
## prop 1 prop 2 prop 3 prop 4
## 0.40540541 0.36220472 0.37857143 0.06190476##
## 6-sample test for equality of proportions without continuity correction
##
## data: top.boost.pr$n out of top.boost.pr$total.dataset.n
## X-squared = 92.31, df = 5, p-value < 2.2e-16
## alternative hypothesis: two.sided
## sample estimates:
## prop 1 prop 2 prop 3 prop 4 prop 5 prop 6
## 0.30303030 0.14634146 0.35384615 0.02808989 0.48684211 0.47272727##
## 13-sample test for equality of proportions without continuity
## correction
##
## data: top.boost.edr$n out of top.boost.edr$total.dataset.n
## X-squared = 108.23, df = 12, p-value < 2.2e-16
## alternative hypothesis: two.sided
## sample estimates:
## prop 1 prop 2 prop 3 prop 4 prop 5 prop 6 prop 7
## 0.37500000 0.05882353 0.14634146 0.35294118 0.33333333 0.40000000 0.33333333
## prop 8 prop 9 prop 10 prop 11 prop 12 prop 13
## 0.44444444 0.28125000 0.65517241 0.40000000 0.47272727 0.02808989The range from above shows that about half of the school districts receive between .5% and 1% more by increasing the entire formula by 4% compared to only increasing the basic education revenue component. In addition, there does seem to be a relationship between districts that receive the highest boost going from a 4% to basic education only vs.a 4% increase to the entire formula and it’s RUCA region, and geography. So, what components are driving that difference?
When looking at the categories that drive the gains from the 4% increase to basic education revenue vs. a 4% increase to the entire formula, local optional aid is the number one driver for 95.3% of the top quartile. Total sparsity is next with 5 districts having that as the top driver. The next biggest driver is operating capital aid with 61% of the second largest driver in the difference between the two scenarios. Small schools revenue and equity aid also end up being rather significant drivers in the difference for the top quartile.
The map is interesting. Obviously, local optional aid is the primary driver in the difference between the two scenarios for most of the districts in the top quartile. In northern Minnesota and in Southwest Minnesota, total sparsity and small schools revenue becomes a bigger deal. Operating capital aid, however, is also significant across nearly all districts. Equity aid also starts to pop up across many districts as the third highest category driving change between the two scenarios.
Let’s do the same thing we did above, but instead of looking at scenarios in terms of how much it boosts revenue, let’s look at it as revenue per APU.
We will begin by summarizing total original revenue as well as the two scenarios per APU. The table below provides the total original revenue per APU, the 4% increase to the basic education component only per APU, and the 4% increase to the entire general education formula per APU, as well as the differences between these scenarios.
A 4% increase to only the basic education component equals a 3.75% increase to revenue per APU - from $7,843.19 per APU to $8,137.10. A 4% increase to the entire general education formula equals a 4.17% increase in total revenue per APU - from $7,843.19 per APU to $8,170.06 per APU. Essentially increasing the entire general education formula by 4% increases the total revenue per APU by nearly $33 compared to only increasing the basic education revenue component only.
Next, let’s take a look at the differences by charter vs. public, RUCA category, and regions.
The charter vs. public table shows that, surprisingly, charter schools receive significantly more revenue per APU than public schools. In the original FY22 revenue, charter schools receive nearly a $1,000 more per APU than public schools - $8,726.00 vs. $7,768.23 per APU. An increase of 4% to the basic education component only provides a larger boost to public schools than charter - 3.76% vs. 3.66%. A 4% increase to the entire formula also provides a larger boost to public than charter - 4.19% vs. 3.94%.
The RUCA table shows that entirely rural school districts receive the largest revenue per APU in the FY22 revenue formula - $8,902.93 vs. $7,752.59 per APU for entirely urban counties. That’s SIGNIFICANTLY larger. If only the basic education revenue component is increased by 4%, entirely urban schools receive the largest bump with 3.77% increase. It gets progressively less as a school district is more rural - 3.64% for entirely rural districts. However, a 4% increase to the entire general education formula means that entirely urban districts get the lowest bump - 4.13%. Then, entirely rural districts get a 4.19% bump, 4.23% for town/rural districts, and a 4.25% bump for urban/town/rural districts.
The planning region table shows that total revenue per APU is significantly closer to each other due to there being a mixture of rural and urban school districts within each planning region. In the original FY22 revenue, Northwest receives the highest with $8,121.39 per APU followed closely by Northeast. The lowest is actually Central with $7,643.96 per APU. The seven county metro receives the largest bump with a 4% increase to only the basic education component with a 3.77% increase. The lowest is Southwest with a 3.69%. By increasing the entire general education formula, Central and Southwest would receive a 4.27% increase followed closely by Southeast and Northwest. The Seven County metro would receive the lowest with a 4.11% increase.
The EDR table shows that EDR 1 and 2 receive the highest revenue per APU with between $8,500 and $9,000 per APU. This is followed closely by other rural EDRs such as 6W, 8, and 3. The lowest are EDRs located in Central MN - ER 9, 7E and 7W. With a 4% increase to only the basic education component, EDR 11 receives the highest bump with EDR 4 and EDRs in Central Minnesota following closely behind. The lowest bump is EDR 1, 6W, and 8. The EDRs with the highest bumps from a 4% increase to the entire general education formula would be EDR 6E, 8, 7E and 7W.
Now let’s see which counties receive the largest “boost” between the two scenarios. The map below shows that rural counties in SW and NW Minnesota receive the highest boost in dollars per APU by increasing the entire formula by 4% vs. only the basic education component. These counties receive $50 or more per APU by increasing the formula vs. the $40 or less of other counties.
The section above shows that